US mortgage rates have risen above 7%, reaching a new high since early 2025.

U.S. mortgage rates have risen above 7% for the first time since January 2025, further exacerbating the already sluggish housing market.

Freddie Mac said in a statement Thursday that the average interest rate on a 30-year fixed-rate mortgage in the U.S. rose to 7.03%, up from 6.95% a week earlier. A year ago, the rate was 6.3%.

The U.S. Treasury market experienced a sell-off as borrowing costs rose. On Wednesday, the yield on the 10-year Treasury note rose 4 basis points to 5.157%, a new high in nearly 20 years.

Rising interest rates are putting pressure on sellers. According to data compiled by Redfin, nearly one-fifth of homes on the U.S. market saw price reductions in August.

“When interest rates rise from over 6% to 7%, they hit a psychological threshold,” said Ken Johnson, a finance professor at the University of Mississippi. “This means we will see the market slow down.”

Anthony Smith, a senior economist at Realtor, shares a similar view. He stated that the 7% mark is "both psychological and mathematical," and that it happens to occur during a seasonal period when buyers' bargaining power typically begins to strengthen.

Data released by the U.S. federal government on Thursday showed that the median price of new homes sold in the U.S. fell 5.8% year-over-year in August to $393,700. This is the largest year-over-year decline since July 2025, reflecting an increase in new home sales contracts for properties priced below $300,000.

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